Impact of Artificial Intelligence on Accounting,
Auditing, and Financial Reporting
Ke-afoon Collins Kindzeka
American Journal of Computing and Engineering
ISSN 2790-5586 (Online)
Vol.6, Issue 1, pp 29 – 34, 2023 www.ajpojournals.org
Impact of Artificial Intelligence on Accounting, Auditing and
Financial Reporting
Ke-afoon Collins Kindzeka1*
1
Association of Chartered Certified Accountants (ACCA)
*Corresponding Author’s Email:
[email protected] Article history
Submitted 09.03.2023 Revised Version Received 20.04.2023 Accepted 24.04.2023
Abstract know-how as their fundamental and try to
Purpose: The study aimed at portraying the develop aggregate behavior or practice. Also,
current role of Artificial intelligence in AI has allowed for factors such as automated
accounting, auditing, and financial reporting. data input, thus enhancing the scope of
accounting, and enabling modern accounting to
Methodology: The study used a descriptive integrate and process huge data.
research design. This form of research design
aims at describing the current status of an Recommendations: It is critical for future
identified variable. Data was collected from policymakers to ensure standardization of the
secondary materials. AI system in the accounting paradigm to ensure
high-quality systems that adhere to the
Findings: Currently, multiple AI technologies principles of accounting.
are being utilized in accounting, auditing, and
financial reporting. The AI expert systems Keywords: Artificial Intelligence,
accept human experiences as well as technical Accounting, Auditing, and Financial
Reporting.
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American Journal of Computing and Engineering
ISSN 2790-5586 (Online)
Vol.6, Issue 1, pp 29 – 34, 2023 www.ajpojournals.org
1.0 INTRODUCTION
Over the decades, Artificial Intelligence (AI) has profoundly developed, impacting multiple fields
such as accounting, healthcare, learning design, technology, manufacturing, and education. AI has
been described as the science and engineering of developing intelligent machines, especially
intelligent computer programs that enable computers to comprehend human intelligence
(Davenport & Ronanki, 2018). One area that AI has significantly impacted constitutes accounting,
auditing, and financial reporting. Accounting professionals have started embracing automation
segments to enhance effectiveness and efficiency in their routine work. Subsequently, accounting,
auditing, and financial reporting systems are becoming more complex and entering computer-
based formats (Li & Zheng, 2018). Accounting databases are getting bigger, prompting the need
to integrate AI paradigms to mitigate the difficulties that could occur in the traditional system.
This report will identify various AI technologies in the field of accounting, auditing, and financial
reporting, project the advantages and limitations of AI in the field, and the overall impact of AI in
the accounting profession.
2.0 LITERATURE REVIEW
Currently, multiple AI technologies are being utilized in accounting, auditing, and financial
reporting. One of the most developed clusters of AI utilized in accounting involves expert systems.
The system was created with the aim of advising accountants on various issues. Expert systems
constitute software programs that can store information and knowledge obtained from a human
expert (Luo et al., 2018). The system hence appears to simulate human experts in a given domain
or field, such as accounting, auditing, or tax. The AI expert systems accept human experiences as
well as technical know-how as their fundamental and try to develop aggregate behavior or practice.
These systems are intrinsically pragmatic and integrate the rules from the experts to define diffuse
knowledge as well as other elements of knowledge depiction. The AI expert system incorporates
the knowledge of multiple human experts and hence assists the accounts or other users to enhance
the quality of the services offered in domains of internal control, evaluation, and identification
(Luo et al., 2018). In addition, the system could easily rectify procedures and actions that could be
easily applied. The application of AI expert systems in the accounting domain is categorized into
financial and management accounting, auditing, personal financial planning, and auditing.
Multiple global industries such as banking, oil and gas, insurance, governments, and
pharmaceuticals are utilizing the AI expert systems into their accounting, auditing, and financial
report paradigms. One of the global companies that have implemented this technology involves
Chevron (Amershi et al., 2019). The company utilizes an expert system as a predictive model to
evaluate the management and performance of its financial systems. The system allows the
company to go beyond the conventional keyword mechanism for the quick formulation of its
structured and unstructured data. Subsequently, the system delivers solutions to the company’s
accounting domain and business requirements, including open-source intelligence, semantic
search integration, multilingual text analytics analysis, data processing, and administration of
various ontologies and taxonomies (Amershi et al., 2019).
Another AI technology developed and utilized in accounting is the Data Input Automation System.
The system integrates mechanisms such as automatic data incorporation and processing of
documents, automatic generation of financial reports, and automatic detection of any form of
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American Journal of Computing and Engineering
ISSN 2790-5586 (Online)
Vol.6, Issue 1, pp 29 – 34, 2023 www.ajpojournals.org
anomalies in auditing (Davenport & Ronanki, 2018). Using AI technologies such as Optical
Character Recognition, the computer could receive a given data and process the data as requested
by the user. The system continuously learns to realize effective and efficient data entry and
document processing paradigms that eliminate the manual, error-prone process. Subsequently,
Data Input Automation Systems such as the Natural Language Generation technology (NLG)
allow the user to convey charts and various forms of data in languages that the user can easily
comprehend; it could also customize reports for particular usage. One company that has
successfully used this technology involves the Commerzbank in Germany. The company utilizes
AI Natural Language Generation technology to produce reports on equity and translate the data.
The AI technology now produces over 75 percent of its equity research report and processes the
data (Carpenter, 2020). Also, the technology has revolutionized other aspects of the organization,
enhancing the consumer banking experience.
2.1 Advantages and Limitations of AI in Accounting
AI has projected both benefits and drawbacks to the accounting profession as a whole. One of the
significant advantages resulting from AI use in accounting involves the improvement of the quality
of accounting information. The traditional or manual integration of accounting practices is often
prone to error and labor intensive, resulting in a reduction of the quality of accounting information.
Nevertheless, the use of AI financial and accounting systems results in enhanced efficiency,
elimination of mistakes, and increased effectiveness (Polak et al., 2020). Furthermore, the AI
systems, such as the expert systems or the NLG technologies, could easily detect any form of error
or anomalies in the data and convey feedback to the users. AI accounting systems could also result
in the alignment of data entry and analysis. This reduces the occurrence or commitment to time-
consuming or repetitive accounting activities. For instance, the AI technologies could assist in
expense tracking, collect data from receipts, and group the involved expense automatically based
on the required segment (Polak et al., 2020). It could then create reports on these obtained financial
data, thus saving on time and the requirement of intensive labor. Subsequently, AI systems provide
forecasting and predictive solutions to the accounting practices. Predictive and forecasting patterns
could assist the enterprise to have a comprehensive understanding and insights associated with its
finance.
Despite these advantages, AI has portrayed various limitations in the accounting profession. The
costs of AI implementation are profoundly high, thus resulting in high accounting and financial
management costs. The organization implementing these systems is compelled to utilize many
resources, including implementation resources and retraining of their workforce to operate the
systems, further increasing the cost of AI in accounting (Ucoglu, 2020). Also, AI accounting
systems require quality data to learn. Without profound valid, and quality data, the models would
not be able to learn. This would create further challenges and anomalies in the system and the
accounting paradigms. Another challenge of AI in accounting involves the issue of privacy and
ethics (Ucoglu, 2020). This limitation is often experienced when the involved AI systems
connotate intellectual property based on personal data.
2.2 Theoretical Framework
2.2.1 Value Creation Theory
The theory holds that from the viewpoint of the value chain, value chain accounting enhances the
association between management accounting data and other elements, such as management
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American Journal of Computing and Engineering
ISSN 2790-5586 (Online)
Vol.6, Issue 1, pp 29 – 34, 2023 www.ajpojournals.org
planning and control practices. Accounting should thus enhance value appreciation and the value
of the business. Through mechanisms such as AI integration, the phenomenon could be achieved.
2.2.2 The Control Intelligent Mechanism Theory
The theory establishes that under particular conditions based on good control practice, the
organization can respond intelligently and automatically based on the adaptive system in the event
of uncertain transformation in the external domains. These intelligent control mechanisms could
involve elements such as dynamic financial intelligent decision-making systems which enhance
process cooperation and control. Therefore, artificial intelligence could be integrated to assist in
achieving control intelligent mechanisms.
3.0 METHODOLOGY
The study used a descriptive research design. This form of research design aims at describing the
current status of an identified variable. The descriptive research design was selected since the study
provided systematic information about artificial intelligence. Therefore, the study did not start with
a hypothesis. Instead, inferences were developed after data collection. The evaluation and
synthesis of the data provided the tests of the hypothesis. Data was collected from other secondary
materials that had already investigated, analyzed, and evaluated the topic. The data was analyzed
using.
4.0 CONCLUSION AND RECOMMENDATIONS
Conclusively, AI has impacted accounting, auditing, and financial reporting in various ways. AI
systems, such as expert systems and NLG technologies, have enhanced the quality of accounting
information by enhancing accuracy and efficiency. Also, AI has allowed for factors such as
automated data input, thus enhancing the scope of accounting, and enabling modern accounting to
integrate and process huge data. Furthermore, AI systems have transformed the traditional
mechanisms of accounting, steering the modern methods of accounting that eliminate intensive
labor and repetitive work. In addition, AI has increased the cost of accounting by resulting in
higher implementation and the need to retrain the workforce on how to utilize the novel systems.
It is critical for future policymakers to ensure standardization of the AI system in the accounting
paradigm to ensure high-quality systems that adhere to the principles of accounting. This will also
assist in risk elimination that could occur as a result of the AI integration.
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American Journal of Computing and Engineering
ISSN 2790-5586 (Online)
Vol.6, Issue 1, pp 29 – 34, 2023 www.ajpojournals.org
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Carpenter, T. (2020). Revolutionising the consumer banking experience with artificial
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Ucoglu, D. (2020). Current machine learning applications in accounting and
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